Direct Mail Card Solicitations Surge, Consumers Silent

Credit card issuers flooded the nation's mailboxes during the second quarter of 2000 with 992 million card solicitations, as nationwide response rates reached a new low of 0.4 percent, according to a report that was released on Oct. 18 by Mail Monitor, the nationwide direct mail credit card tracking service managed by BAIGlobal Inc., Tarrytown, NY, a market research firm.

The 0.4 percent response rate is the lowest rate ever, according to the report, and shows that companies had to send out an average of 250 solicitations to get just one response. The rate is a decline from the 0.7 percent for the prior two quarters and continues a slide of nationwide responses to direct mail offers.

"These results follow the typical pattern we've seen in the marketplace," said Robert Skolnick, executive vice president at BAIGlobal. "As mail volume goes up, responses usually go down due to mailbox clutter. It is not surprising that this quarter's extraordinarily high level of mail resulted in a remarkably low level of response."

However, the increase in solicitations did seem to produce some results: Despite the low percentage of responses, the number of solicitations brought in 4 million new applications from direct mail in the second quarter, a 14 percent increase over the same period last year.

The second quarter's mail volume represents the highest quarterly amount ever measured since the company began tracking the general purpose credit/charge card industry in 1988. In total, 79 percent of all households in the United States received at least one card solicitation during the quarter.

"Card marketers sent out direct mail with a vengeance this past quarter," said Skolnick. "The high volume represented a sharp increase over the low volume of the prior six months, when volume was at 629 million pieces for the first-quarter 2000 and 510 million solicitations for 1999's final quarter. Although historically we've always seen a boost in mail volume during the second quarter, this year the numbers hit an all-time high."

The survey also found that the top-10 card issuers in the United States accounted for 91 percent of all mailings during the quarter, slightly higher than the second quarter of 1999. "Many card issuers have been consolidating their marketing efforts after the mergers and portfolio acquisitions of the past year or two," Skolnick said. "This may explain why mail volume was low in the prior two quarters and then surged ahead in the second quarter when these issuers got back into the marketplace."

Over the past year Mail Monitor also has been tracking other means by which consumers apply for credit cards, such as online applications. In the second quarter of 2000, research showed that 7 percent of consumers reported applying for a credit card online.

"While this number is small compared to the number of consumers who apply for a card via direct mail, we've seen the amount of online applications steadily climb for each quarter this past year," Skolnick said. "We don't expect to see Internet marketing activities overtake direct mail as a major source for new cardholders soon, but its role in the marketing mix is certainly of growing importance."

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